GOLD Price Analysis – July 19, 2024

Daily Price Outlook

Gold (XAU/USD) extended its losing streak for the third consecutive trading day, falling to around the $2,410 level. This decline follows a recent surge to all-time highs above $2,480 on Tuesday.

However, the gold's downtrend is being pressured by a rebound in the US Dollar (USD) and rising bond yields. This shift is fueled by increasing speculation that the Republican Party may secure a win in the upcoming US Presidential elections later this year.

However, the expectations for Donald Trump’s comeback as US President have increased after an assassination attempt. Biden’s possible withdrawal due to health issues also boosts Trump’s chances and strengthens the US Dollar.

Economic Data and Fed Rate Cut Speculation Boost Gold's Appeal

On the US front, investors expect the Federal Reserve (Fed) to start cutting interest rates in September, believing inflation is returning to the 2% target. Policymakers still want more confirming data.

However, the speculation for Fed rate cuts grew after June's Consumer Price Index (CPI) showed resumed disinflation, with both annual headline and core CPI slowing more than expected.

Additionally, monthly headline inflation decreased for the first time in over four years, and cooling US labor market conditions have further supported the prospects for rate cuts.

On the data front, the Unemployment Rate rose to 4.1% in June, the highest since November 2021. Initial Jobless Claims for the week ending July 12 were 243K, above the expected 230K and the previous 223K, indicating more people are filing for unemployment benefits than anticipated.

These developments support expectations for Fed rate cuts, boosting gold's appeal as a hedge against lower interest rates. Consequently, gold prices are likely to remain strong amid economic uncertainties.

GOLD (XAU/USD) - Technical Analysis

Gold (XAU/USD) is trading at $2,417.88, reflecting a decline of 0.77%. The 4-hour chart highlights critical levels for traders. The pivot point is set at $2,432.60, serving as a crucial indicator of potential price movements.

Immediate resistance is noted at $2,451.84, followed by $2,482.70 and $2,510.78. On the downside, immediate support is identified at $2,406.52, with further supports at $2,381.37 and $2,350.44.

Technical indicators point towards a bearish sentiment. The Relative Strength Index (RSI) stands at 37, suggesting the metal is approaching oversold conditions. The 50-day Exponential Moving Average (EMA) is positioned at $2,416.98, closely aligning with current prices, indicating a potential support level.

Given the technical setup, traders might consider selling below the pivot point of $2,432. The suggested trade setup includes an entry price below $2,432, a take profit target at $2,394, and a stop loss at $2,453.

This strategy is designed to capitalize on potential downward momentum while mitigating risk through a clearly defined stop loss.

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